Ex-OpenSea Manager Nate Chastain Guilty of NFT Fraud, Money Laundering

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Nathaniel Chas­tain, a for­mer man­ag­er at OpenSea, was con­vict­ed by a jury of wire fraud and mon­ey laun­der­ing on Wednes­day, May 3, mark­ing the cul­mi­na­tion of a land­mark case with broad impli­ca­tions for the NFT indus­try. The case has been described as the first ‘insid­er trad­ing’ pros­e­cu­tion brought with­in the NFT world.

Chas­tain plead­ed not guilty, and the indus­try has been pay­ing espe­cial­ly close atten­tion to a poten­tial­ly prece­dent-set­ting out­come since the jury began delib­er­at­ing ear­li­er this week

In June 2022, Chas­tain was charged with wire fraud and mon­ey laun­der­ing by the Depart­ment of Justice. 

Chas­tain alleged­ly made over $50,000 by “using his knowl­edge of con­fi­den­tial infor­ma­tion to pur­chase dozens of NFTs in advance of them being fea­tured on OpenSea’s home­page,” accord­ing to the FBI’s Michael Driscoll in a state­ment last year. 

Reuters report­ed that pros­e­cu­tor Thomas Bur­nett, in clos­ing argu­ments, said that Chas­tain “abused” his sta­tus at OpenSea, and vio­lat­ed its con­fi­den­tial­i­ty agreement. 

Chastain’s lawyer, Daniel Filor, argued that he did not break any com­pa­ny rules with the trades.

OpenSea asked Chas­tain to resign in Sep­tem­ber 2021, when the NFT pow­er­house addi­tion­al­ly said it was putting in place new prac­tices to pre­vent sim­i­lar future inter­nal lapses. 

An OpenSea spokesper­son pre­vi­ous­ly told Block­works that Chastain’s res­ig­na­tion was because he was found to be “in vio­la­tion of our employ­ee poli­cies and in direct con­flict with our core val­ues and principles.”

Pri­or to the start of the tri­al, OpenSea CEO told pros­e­cu­tors that the case against Chas­tain was “unfair” and that it impact­ed his men­tal health, accord­ing to court documents. 

Chas­tain had filed five motions to drop evi­dence in regard to his OpenSea com­pen­sa­tion and exclude terms such as insid­er trading–arguing that NFTs are not securities.

How­ev­er, Judge Jesse Fur­man denied the motions and said that Chastain’s insid­er trad­ing argu­ments were “moot” in April.


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